Learn more about fiduciary bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Fiduciary Bonds?
A fiduciary bond is a bond that courts may require in any situation in which one person is acting in a fiduciary capacity on behalf of another person or the estate of a deceased individual. These bonds are known by a number of names, depending on the nature of the fiduciary relationship and the terminology used in a given state. Common names for fiduciary bonds include executor bonds, probate bonds, administrator bonds, guardianship bonds, conservatorship bonds, and trustee bonds.
Because fiduciaries make decisions on behalf of others and control their assets, a surety bond is often required as a way to ensure that they do not violate the trust placed in them, either intentionally or through negligence and carelessness.
Who Needs Them?
The following may all be required by the court with jurisdiction over the matter to purchase a fiduciary bond:
The executor or administrator of the estate of a deceased individual
The guardian of a minor
The conservator of an adult who is incapable of managing his or her own affairs
The trustee in a bankruptcy action
Fiduciary bond requirements and the specific bond names vary from state to state and even from case to case. In states or situations that don’t normally require this type of bond, beneficiaries or creditors may ask the court to order a fiduciary to obtain one. That’s not uncommon if there is reason for concern about the fiduciary’s trustworthiness or financial status.
How Do They Work?
A fiduciary bond provides protection against financial loss due to negligence, fraud or embezzlement committed by the fiduciary. If a claim against the bond is determined to be valid, the surety company that issued the bond will pay the claim and then pursue the fiduciary for reimbursement of that amount.
How Much Do They Cost?
The amount of the bond is established by state law. That amount can vary over time, as the assets under the fiduciary’s management increase or decrease in value. The fiduciary will pay a percentage of that amount as the premium for the bond. The fiduciary must use his or her own funds, not the funds belonging to the estate or trust, to pay for the bond. Fiduciary bonds typically must be renewed annually, and the fiduciary must pay another premium at each renewal.
Let our experts help you obtain the fiduciary bond you need. Complete our convenient online application today.
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